Chapter 13 Notes Accounting

Current Liabilities A. Classification 1. Current Liabilities--current liabilities are liabilities that will come on in less(prenominal) than unrivalled course of study or virtuoso operating cycle, whichever is longer 2. long Liabilities--long-term liabilities are liabilities that will spawn on with in greater than one year or one operating cycle, whichever is longer B. Accounts Payable-- deems grudge collectible are birdsong promises to others to pay for goods or services purchased on open account 1. Valuation--in practice, en unadulterated write off related to the accounts payable is treat because the center of the rabbet is not usually material in relation to the net income for the finish 2. hard exchange Discounts--when cash discounts are offered as an inducement for prompt payment, the amount of the accounts payable may be recorded using either the crude(a) rule or the net method a.

Gross Method--the gross method assumes that cash discounts will not be taken and highlights the discounts taken 1) Accounting a) Date of Borrowing--accounts payable and the related expense/ summation are recorded at the gross let out price b) Date of Payment--any discounts taken are recorded as a reduction in the related expense/asset 2) Illustrati ons a) A raft pu! rchased inventory on open account at an invoice price of $5,000; terms were 2/10,n/30; the corporation gainful the invoice within the discount period Purchases 5,000 Accounts Payable 5,000 Accounts Payable 5,000 interchange 4,900 (5,000 2% x...If you want to get a full essay, tell apart it on our website: BestEssayCheap.com

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